February 18, 2013

Toddler Math
How to pay for Obama's preschool plan

President Obama's preschool proposal has provoked predictable grousing from some predictable sources. House Speaker John Boehner said last week that getting the federal government involved in early childhood was "a good way to screw it up." But the idea is also picking up some support on the right. "President Obama has taken on a big challenge in a realistic and ambitious way," New York Times columnist David Brooks wrote on Friday. "If Republicans really believe in opportunity and local control, they will get on board." And at least one Republican, Senator Johnny Isakson of Georgia, seems ready to join the cause. On Saturday, while appearing on MSNBC’s "Up with Chris Hayes," Isakson called universal preschool "a great idea."

Of course, as Isakson was quick to point out, it's a great idea that requires the federal government to spend money upfront—on teachers, facilities, and other related costs. "We've got to find the money to do it." Finding that money won't be easy, particularly in the Republican-controlled House. "May I introduce you to the majority over here," a senior House Democratic aide quipped over email. "They do not like any spending—especially social spending. … If we got it we would have to cut spending big-time somewhere else."

That's probably true. And, in a sense, that's a shame. The evidence suggests that spending money on early childhood yields tremendous returns. The famous Highscope Perry Preschool supposedly yields seven dollars in benefits for every dollar of investment. If you want to put it in more concrete terms, states spend about $30,000 a year to keep somebody in prison, according to a 2010 study by the Vera Institute of Justice. Programs like Perry spend about half that amount per child, per year. And that's not accounting for the fact that the prisoners are probably in jail for a lot longer than the kids are in preschool.

But Obama's early childhood proposal, like any legislative initiative, would have to get an official cost estimate from the Congressional Budget Office. The estimate from CBO is not likely to show those kinds of savings, because the agency cannot assume every school would work as well as the Perry program's did—and because, even if every school did perform up to that level, the actual effect on government finances would be murky. How exactly would those savings materialize—as lower expenditures on special education and the criminal justice system? As higher revenue from income taxes? How much would go to states and how much to Washington? And so on.

In theory, the sheer cost of a program like Obama has proposed isn't outrageous. The Center for American Progress plan, which most people are treating as something like a prototype, called for spending about $10 billion a year, or about $100 billion over ten years. That's a lot of money but not a lot of money. Finding revenue to pay for it wouldn't be that difficult—and the most obvious place to look would be the estate tax. Obama's proposal for raising the estate tax would generate enough money to pay for the whole early childhood program. And there'd be a certain justice in using the estate tax, championed by Theodore and then Franklin Roosevelt as a way to reduce concentration of wealth, to finance a program that would give low-income children the nurturing and education they need to succeed in life.1

Getting Republicans to support new taxes to finance a new program, even one some of them like and Republican governors are already implementing, would probably be more difficult than getting them to support new taxes to finance deficit reduction, which they've been reluctant to do. Obama's preschool proposal "costs money, it doesn't benefit the rich, and it's something Obama wants," Kevin Drum wrote last week. "That's three strikes, and that's all she wrote." But it's not out of the question the early childhood proposal could become a piece in negotiations over deficit reduction.2 Given the benefits the program could yield, financial as well as social, it should be.

1

In principle, using that revenue for the early childhood program would preclude using it for deficit reduction. In practice, Republicans seem unwilling to enact the majority of Obama’s tax agenda anyway—so this doesn’t really take money away from deficit reduction, at least in any meaningful sense. Alternatively, lawmakers could fund this program with various sin taxes or other revenue sources not currently on the agenda.

2

Jonathan Chait raised that possibility, suggesting Republicans could offer that as a concession. That'd make more sense politically than fiscally, but that’s never stopped Congress before.